Economics is a social science that examines how people choose among the alternatives available resources to them to the optimum level. It is social because it involves people and their day-in-day-out behavior. It is a science because it uses a scientific approach in its investigation of solutions. Economics is used in the business world to check on financial, market-related, and other factors that may affect an organization and its business operations.
Supply and Demand is the basic law in economics. Supply is the number of goods the producers deliver in the market, whereas Demand is the amount market consumers are willing to buy (Aspromourgos, 2019). In an efficient market, the point where the supply curve and the demand curve meet are called the equilibrium point, and it is the point where the supply and demand are sufficient enough for each other to be met.
Taking into consideration a luxury watchmaker that sells luxury watches and sells them at a price of $ 100. If the price is below $ 50, it will get orders of 10,000 per month. But the brand produces only 1000 quantities every month such that it receives the same number of orders every month and it clears its inventory in a month itself. The above example gives an overview of concepts and laws of economics, which include the law of supply and demand, which provides a good insight into economics.
Learning economics is one thing but developing the tools to make business decisions is another. Economics teaches and gives one concrete tools for analysis. For example, conjoint analysis is a statistical approach to measuring consumer demand for specific product features (Popovic et al., 2018). This tool allows us to get at the surprisingly complicated feature versus price tradeoffs that consumers make every day. For example, imagine someone works for a Samsung company, and they want to know what part of Samsung should improve: Battery life, screen size, phone cover, or camera. A conjoint analysis will let a person know which improvements customers value and are worth the company’s time and money.
Whether it is scarcity, opportunity cost, or equilibrium, an economics course will give the fluency in fundamental terms needed to understand how markets work. Even if one does not use these words often in their current role, studying these economic terms will give one a better understanding of market dynamics as a whole and how they apply to their organization.
Running into arguments too soon and too often is a challenge faced by economists. Normally Economists have a sophisticated view regarding any issue, which may be completely different from how an ordinary person on the street perceives it. For example, many oppose when it is said that currency subsidy is not a good thing. Crypto is the main concern rather than currency, the property price will fall, despite my ability to prove the facts and the figures. The worst-case scenario is debating with another Economist as it may lead to a long debate that may take hours.
In conclusion, economies offer different views and angles on issues in the business world. Looking at the pros and cons before solving a problem is what economists do. Economists also help in running the business world by giving advice in decision-making and also predicting possible outcomes in the stock market.
References
Aspromourgos, T. (2019). What is supply-and-demand? The Marshallian cross versus classical economics.Review of Political Economy, 31(1), 26-41. Web.
Popovic, M., Kuzmanović, M., & Savić, G. (2018). A comparative empirical study of Analytic Hierarchy Process and Conjoint analysis: Literature review.Decision Making: Applications in Management and Engineering, 1(2), 153-163. Web.